How does the percentage compare with the capitalization

Assignment Help Managerial Accounting

Reference no: EM132480507

Point 1: Jaguar Land Rover Automotive PLC (JLR) is a maker of luxury autos based in Coventry, United Kingdom. JLR uses IFRS and has a fiscal year-end of March 31. You have been asked to use your knowledge of IFRS to convert key metrics for the company to a U.S. GAAP basis. For simplicity, you may assume that the only material differences between JLR's as-reported numbers and those it would report under U.S. GAAP are traceable to its policy of capitalizing development costs.

Internally Generated Intangible Assets (from Footnote 2, Accounting Policies)

Point 2: Research costs are charged to the consolidated income statement in the year in which they are incurred.

Point 3: Product development costs incurred on new vehicle platforms, engines, transmission and new products are recognised as intangible assets-when feasibility has been established, the Group has committed technical, financial and other resources to complete the development and it is probable that the asset will generate future economic benefits.

Point 4: The costs capitalised include the cost of materials, direct labour and directly attributable overhead expenditure incurred up to the date the asset is available for use.

Point 5: Interest cost incurred is capitalised up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset.

Point 6: Product development cost is amortised over a period of between two and ten years.

Point 7: Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment loss, if any. Amortisation is not recorded on product development in progress until development is complete.

Required:

Question 1: What percentage of R&D expenditures was capitalized during the fiscal year ending March 31, 2017? How does this percentage compare with the capitalization ratios of the German automakers profiled ?

Reference no: EM132480507

Questions Cloud

Find the net present value of the investment : Present value of one, 3 periods at 12% 0.7118. Assume straight-line depreciation is used. Ignore income taxes. The net present value of the investment is ______

Determine investor which financial statement and accounts : If you were an investor which financial statement AND accounts would you review? Why? If you were a member of the management team

Provide a conceptual definition of the concept : Provide a conceptual definition of the concept. Refined meaning of the concept

What will be the effect on operating income : The company has received a special order for 1,000 units at $80.00 per unit. If the special order is accepted, what will be the effect on operating income

How does the percentage compare with the capitalization : What percentage of R&D expenditures was capitalized during the fiscal year ending March 31, 2017? How does this percentage compare with the capitalization

What is the gain-loss on the retirement of these bonds : Manfred Company retired $500,000 of 5% bonds payable at 96 on June 30, 2017, What is the gain/loss on the retirement of these bonds

Ways of controlling or regulating the population : Do you think discourses of health and disability can be used as ways of controlling or regulating the population? Explain your answer.

What is meant by the concept social determinants of health : What is meant by the concept "social determinants of health"? What are some examples?

How does Rich Inc record this allowance : Cody offers them a 20% allowance on the cage. Cody agrees to the allowance. How does Rich Inc. record this allowance

User Account

All Pages